Category: Suze Orman

Student Loans Should be Dischargeable in Bankruptcy

Flipping channels over the weekend I stumbled on the fabulous Suze Orman’s TV show. I could only stand watching for a few minutes, but in that time I got to see her give an overwrought soliloquy on the outrage that student loansGrads Kit are not dischargeable in bankruptcy. She is working to fix this, she tells us.

I do not think she has as much pull in Washington as her followers imagine. But I am happy to throw my weight behind the effort too. I imagine that Suze would be alarmed at my motivations, but on this particular issue I find myself agreeing with her. Could be a first.

Discharging debt is the essence of the bankruptcy process. What the bankruptcy petitioner owes is either wiped out entirely (in Chapter 7) or has its terms and/or amounts modified (in Chapter 13.)

However, there are a few exceptions. Actually, more than a few.

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This Just In: Suze Turns Bearish

Yesterday former Merrill broker and municipal bond investor Suze Orman, CFP, sent out word to her legions of followers that they should "be extra careful in how you invest at this point in time." The Oracle of Berkeley continued:

A pullback from here shouldn’t be surprising given the fast and steep rise. Meanwhile there’s the evolving concern that Greece’s debt problems could spread to other countries given the inter-connectedness of all our economies. Add it all up and there’s more to worry about than cheer.

Orman & Welch (copyrighted) I am writing down the date she wrote this "2-8-10" and that day’s S&P close "1056.74" on a post-it I am placing on the wall here at BMA World Headquarters. I would encourage my legion of followers to do the same, so that together we can bask in the wisdom and foresight of the Great Suze.

Orman goes so far as to recommend that investors act on her vision through dollar cost averaging. That’s more than a little asinine, but before discussing it, let me dwell a bit on her reasons for worry. It’s not every day that Suze shares her market timing insights. (In fact, I think this may be the first time ever.)

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Now Suze Hates Cards

Saturday night before last, Suze Orman issued yet another directive to her followers about credit cards. Readers may recall that back in March Suze told Credit-cards Lotus Headus that we should make only the minimum payments on our cards until we had an emergency fund equal to eight months’ expenses built up. That inspired one of my many unsuccessful business ideas.

Well, March was a long time ago. Stock and house prices are up, the recession has ended, and it even looks like the unemployment rate has crested. So I guess it is time for Suze to change strategies once again. This time the idea is to drop the cards. "Let’s go back to the times when you literally paid cash for everything. That’s right. Cash. Stop using your credit cards altogether.”

I don’t watch Orman’s show. I found out about this from a post at SmartSpending, as well as a post at Get Rich Slowly. That post, written by our friend Baker from ManvsDebt, has the virtue of an embedded video of Orman challenging us to spend only in cash. You can even sign up to join her Back to Cash Movement.

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On Money and Psychology

One of several recurring sub-themes here at Bad Money Advice is that some givers of personal finance advice, particularly the mass market gurus, say things that can only be justified assuming an irrational audience incapable of acting in their own best interest.

Freud Note So, for example, when Suze Orman tells her readers that they should absolutely never borrow from their 401k account to pay off a credit card balance, I give her a hard time for giving terrible advice based on the assumption that her audience has no willpower and will merely run up the credit card balance again.

But when I criticize the gurus for giving bad money advice that is, in fact, bad psychotherapy, I do not mean that everybody ought to be able to behave in a perfectly rational manner around money. Quite the opposite. We are all merely human, not uber-logical Vulcans. We act sub-optimally around money (and everything else) for a variety of emotional and behavioral reasons.

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The Famous Suze Orman

Some days I agonize over what to write about. Other days the decision is made for me.  Yesterday’s Sunday New York Times Magazine had a long story on Suze Orman, so this is one of those days without agony.

The genre of the article can probably best be described as celebrity profile.  It’s not quite a puff piece.  It mentions just enough minor flaws to give its NYTimesBldgByLuigiNovi-Nightscream subject some character and the author does her journalistic duty by mentioning that Orman once did advertising for GM and certainly does what she does for the money.

On the other hand, there is not much in the way of discussion of what Orman has to say, other than what is necessary to explain what it is that she does for a living to the few readers of the Times who have not yet heard of her.  Mostly, the article is about the fact that she is wildly popular right now, without much discussion of why.

Which might strike a person as a little odd if they thought of Orman as a writer or pundit.  It would be hard to imagine a story on a spike in popularity of, say, Malcolm Gladwell or Rush Limbaugh, without a few paragraphs on what made them particularly big just now and maybe even a hint of criticism from a responsible third party.

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